I am writing to provide my comments on the above-referenced proposed rule, and respond specifically to two sets of questions posed:

Is the proposed exemption for independent board members that sit on both a parent's and consolidated majority-owned subsidiary's board of directors appropriate? Is the requirement that the board member also is otherwise independent of the subsidiary necessary? Should the exemption be limited only to wholly-owned subsidiaries or other specified level of ownership? Should the exemption be denied if the subsidiary maintains a listing for its own securities? Is there any need for a similar exemption from the "interested person" test for investment companies?

I agree with the proposed exemption for independent board members that sit on both a parent's and consolidated majority-owned subsidiary's board of directors. As the staff noted in the proposal, entities with a holding company structure operate through subsidiaries, and there will often be an overlap among the members of the board of directors of both the parent and the subsidiary. At times, an issuer parent may itself be a controlled entity, and there may be overlap among the members of the board of both the issuer parent and its parent (which may itself be another issuer, or it may be privately held). In all such cases, there are valid business reasons for the overlap among the various board of directors, since the knowledge and experience gained by an individual sitting on the subsidiary's board, and any relevant expertise such individual may have, would be useful in their capacity as a member of both boards of directors.

The requirement that such a board member be otherwise independent is appropriate. To permit otherwise would essentially allow all members of the audit committee of any controlled subsidiary issuer to not meet the independence requirements.

In addition to the parent-majority owned subsidiary relationship, there may be other relationships for which an overlap among audit committee members may be appropriate for a controlled entity. For example, two subsidiary issuers may have a common parent, and the parent may wish one individual that otherwise meets the independence criteria to sit on the board and audit committee of both of its issuer subsidiaries. The final rule should provide for maximum flexibility for controlled-entity issuers in this regard, while still maintaining the requirement that the common board member must otherwise meet the independence requirements.

Accordingly, I recommend that Proposed Exchange Act Rule 10A-3(b)(1)(iv)(B) be modified to read as follows:

"(B) An audit committee member that sits on the board of directors of both a listed issuer and any affiliate of the listed issuer, including another listed issuer, is exempt from the requirements of paragraph (b)(1)(ii)(B) of this section if the member, except for sitting on both boards and receiving any compensation in respect thereto, otherwise meets the independence requirements of paragraph (b)(1)(ii) of this section with respect to both the listed issuer and such affiliate."

I do not believe the ending clause contained in the Proposed Exchange Act rule which starts out as ", including the receipt of only ordinary course compensation..." is required. The reference to paragraph b(1)(ii) of this section is sufficient to indicate the eligibility for this exemption.

The term "affiliate" is appropriately defined in Proposed Exchange Act Rule 10A-3(e)(1).

Consistent with the above recommendation, I would recommend that (i) proposed Exchange Act Rules 10A-3(b)(1)(ii)(A) and 10A-3(b)(1)(iii)(A) be modified to prohibit the acceptance directly or indirectly of any consulting, advisory or other compensatory fee from the issuer or any affiliate thereof (vs. the proposed prohibition which only applies to payments made by the issuer), and (ii) proposed Exchange Act Rule 10A-3(b)(1)(ii)(B) be modified to prohibit the member from being an affiliated person of the issuer or any affiliate thereof (vs. the proposed prohibition which applies to the issuer or any subsidiary thereof).

Accordingly, I recommend that Proposed Exchange Act Rule 10A-3(b)(1)(ii)(A) and 10-A3(b)(1)(ii)(b) be modified to read as follows:

"(A) Accept directly or indirectly any consulting, advisory or other compensatory fee from the issuer or any affiliate thereof; or

(B) Be an affiliated person of the issuer or any affiliate thereof."

Similarly, I recommend that Proposed Exchange Act Rule 10A-3(b)(1)(iii)(A) be modified to read as follows:

"(A) Accept directly or indirectly any consulting, advisory or other compensatory fee from the issuer or any affiliate thereof; or"

Is additional clarification necessary regarding the consulting, advisory or other compensatory fee prohibition? For example, should we clarify whether "compensatory fees" would include compensation under a retirement or similar plan in which a former officer or employee of the issuer participates? Should there be an exception for a de minimis amount of payments? If so, what amount would be appropriate? How would such an exception be consistent with the purposes of the prohibition?

The release states that the Proposed Rule is not intended to preclude independence on the basis of ordinary course commercial business relationships. However, it is unclear as to whether independence would be deemed impaired if a board member of an issuer was affiliated with an entity in which the listed issuer had the following relationship on an arm's length basis:

The issuer maintains commercial bank deposits at the entity for which the issuer is charged a service charge fee.

The issuer has a loan outstanding from the entity.

The issuer purchases raw materials from the entity.

The issuer trades in marketable securities through the entity, in which the entity provides no advice to the issuer as to what particular securities the issuer should be trading in.

The issuer purchases machinery and equipment used in its operations from the entity.

The issuer makes a charitable contribution to the entity, and the contribution is publicly acknowledged.

In each of the above examples, the payment from the listed issuer to the entity could in some sense be deemed a "compensatory fee" as used in Proposed Exchange Act Rules 10A-3(b)(1)(ii)(A) and 10A-3(b)(1)(iii)(A), yet each of these examples would seem to be ordinary course commercial business relationships. I believe more guidance is required to clarify the Commission's intent as to what exactly are the types of ordinary course commercial business relationships for which independence will not be deemed impaired.

To provide such clarification, I recommend that Proposed Exchange Act Rule 10A-3(e)(6) be modified to read as follows:

"(6) The term indirect acceptance by a member of an audit committee of any consulting, advisory or other compensatory fee means (i) acceptance of such a fee by such member's spouse, such member's minor child or stepchild, or such member's child or stepchild sharing a home with such member or (ii) acceptance of such a fee by an entity in which such member is affiliated.

(7) The term consulting, advisory or other compensatory fee means any payment of cash or other consideration, in return for which any advisory service (including accounting, consulting, legal, investment banking, financial and administrative) is provided. The term consulting, advisory or other compensatory fee does not include any payment of cash or other consideration for the following: the purchase of raw materials and other ordinary course of business operating expenses, the purchase of property, plant and equipment, interest and other fees paid with respect to indebtedness, commissions for the purchase or sale of marketable securities for which the recipient has not acted as an underwriter, and any other payment made in the ordinary course of business so long as no advisory services were provided in return."

In addition, Proposed Exchange Act Rules 10A-3(e)(7) and 10A-3(e)(8) would be renumbered as 10A-3(e)(8) and 10A-3(e)(9), respectively.